Vps34 PI3K is thought to be the main producer of phosphatidylinositol-3-monophosphate, a lipid that controls intracellular vesicular trafficking. The organismal impact of systemic inhibition of Vps34 kinase activity is not completely understood. Here we show that heterozygous Vps34 kinase-dead mice are healthy and display a robustly enhanced insulin sensitivity and glucose tolerance, phenotypes mimicked by a selective Vps34 inhibitor in wild-type mice. The underlying mechanism of insulin sensitization is multifactorial and not through the canonical insulin/Akt pathway. Vps34 inhibition alters cellular energy metabolism, activating the AMPK pathway in liver and muscle. In liver, Vps34 inactivation mildly dampens autophagy, limiting substrate availability for mitochondrial respiration and reducing gluconeogenesis. In muscle, Vps34 inactivation triggers a metabolic switch from oxidative phosphorylation towards glycolysis and enhanced glucose uptake. Our study identifies Vps34 as a new drug target for insulin resistance in Type-2 diabetes, in which the unmet therapeutic need remains substantial.